New California Law Requires Legal Service Location Reporting

Effective Jan. 1, California credit unions with 10 or more locations in the Golden State, regardless of a federal or state charter, must file with the state’s Department of Financial Institutions one or more central locations where legal papers can be served for notices of levy or attachment against deposit accounts, the contents of safe deposit boxes and other property held by the credit union.

The requirement, put into place by the passage of state Assembly Bill 2364, must also be followed by banks and other deposit institutions.

According to DFI Spokesman Patrick Carroll, current law requires notices be served at a financial institution’s central location, and if such a location is not specified, the branch at which the safe deposit box or accounts are held. Should the papers be served at the wrong branch, the institution could refuse them.

Carroll said the new law requires financial institutions to designate a central location and report it to the DFI so the state regulatory agency can post a list of central locations on its website. Information must include the physical address of the location and the days and hours legal service will be accepted.

Should institutions fail to designate a central location, all of its locations become central locations and legal papers can be served at any or all branches or administrative offices.

The law provides an exemption that will apply to most credit unions: institutions with fewer than 10 California branches or locations have the option to designate one or more central locations, the DFI said in a release.

The DFI said it is in the process of developing an electronic form for collecting the information to publish on its website. DFI licensees will receive an email from the regulator with a link to a secure Web form where they can input the information. Federally chartered credit unions may receive the email by subscribing to the “AB2364” topic on the DFI’s website.